1. Central Arizona Water Conservation District Dee Fuerst rev. 4/17/11

2. LOCATION OF CREDITS Over the years, the Arizona Water Banking Authority (AWBA) has stored CAP water at approximately 25 recharge sites throughout the CAP service area. Some of this water is intended to be a source of supplemental supply for the CAP M&I subcontracts during a shortage event. It may be desirable to relocate some of the stored water to other, more strategically located sites. In other words, move the water to a recharge facility that is closer to a certain service area or regional location. There is a method for doing this that does not require physically pumping the water, transporting it, then re-storing it. The following scenario illustrates how water and credits can be re-postioned. It takes good planning and cooperation among all the parties involved.

3. Scenario: Water and credits from Site 1 Need to be relocated to Site 2. CAP Site 1 Recharge Facility AWBA has 10,000 AF stored here Others have 6,000 AF stored here TOTAL 16,000 AF stored here AWBA has 8,000 AF stored here Others have 2,000 AF stored here TOTAL 10,000 AF stored here Site 2 Recharge Facility

4. Process Step 1: Use incoming water orders to maneuver water and credits from Site 1 to Site 2. CAP Site 1 Recharge Facility AWBA has 10,000 AF stored here Others have 6,000 AF stored here TOTAL 16,000 AF stored here AWBA has 8,000 AF stored here Others have 2,000 AF stored here TOTAL 10,000 AF stored here Site 2 Recharge Facility Customers New Order 1,000 AF

5. Process Step 2: Instead of delivering the order for CAP water to Site 1, deliver it to Site 2. Facility owners are in agreement to do this. CAP Site 1 Recharge Facility AWBA has 10,000 AF stored here Others have 6,000 AF stored here TOTAL 16,000 AF stored here AWBA has 8,000 AF stored here Others have 2,000 AF stored here TOTAL 10,000 AF stored here Site 2 Recharge Facility Customers New Order 1,000 AF

6. Process Step 3a: The title to 1,000 AF of CAP water already stored at Site 1 is transferred from AWBA to the Customer. CAP AWBA has 8,000 AF stored here Others have 2,000 AF stored here TOTAL 10,000 AF stored here Site 2 Recharge Facility Customers New Order 1,000 AF Site 1 Recharge Facility AWBA now has 10,000 9,000 AF stored Others still have 6,000 AF stored New Customer order has 1,000 AF stored TOTAL 16,000 AF stored

7. Process Step 3b: The 1,000 AF of CAP water delivered to Site 2. It is placed in AWBAs name in trade for its stored credits at Site 1. CAP Site 2 Recharge Facility Customers New Order 1,000 AF Site 1 Recharge Facility AWBA now has 10,000 9,000 AF stored Others still have 6,000 AF stored New Customer order has 1,000 AF stored TOTAL 16,000 AF stored AWBA now has 8,000 9,000 AF stored Others still have 2,000 AF stored TOTAL 10,000 11,000 AF stored

8. END RESULT:Water and credits have been repositioned without pumping without building infrastructure and with consent of facility owners. CAP Site 1 Recharge Facility Site 2 Recharge Facility AWBA now has 10,000 9,000 AF stored Others still have 6,000 AF stored New Customer order has 1,000 AF stored TOTAL 16,000 AF stored AWBA now has 8,000 9,000 AF stored Others still have 2,000 AF stored TOTAL 10,000 11,000 AF stored

9. END RESULT The Customer has title to 1,000 AF stored CAP water at Site 1. 1,000 acre-feet of additional CAP water is stored at Site 2. AWBA now has title to the additional 1,000 AF stored at Site 2. GOAL Accomplished: Water and credits located at Site 1 needed to be located at Site 2. This was completed without pumping or building infrastructure.

10. Other Points to Address There will be other points to address when conducting these transactions, e.g.: –Costs for the original recharge vs costs for the new recharge site –Facility losses for the original recharge site, compared to the facility losses for the new recharge site –Facilities annual capacity –Facilities permit capacity